WS To Follow AC Lead With Commission Changes

OpenJaw

WestJet has announced changes to its commission structure on new bookings for domestic and transborder fares, with a start date of 01OCT, 2015. Following on the heels of moves recently announced by Air Canada, the changes will see commission cut to zero on Econo fares, reduced payment on Flex fares and increased compensation on higher-margin Plus fares.


"The change comes as part of an initiative to continue to offer low fares and remain competitive," the airline said in a release.


Commission will no longer apply on Econo fares, in a tit-for-tat move that follows Air Canada's announcement earlier this month that it will eliminate commission on lower-cost Tango fares.


The new WestJet commission level on domestic and transborder fares moves from a standard 7% commission on all fares to a fare-bundle commission of 4% on Flex fares. In a deviation from Air Canada's changes, WestJet has increased commission to 8% on Plus fares – AC is paying 4% on its higher fare categories.


"The change comes as part of an initiative to continue to offer low fares and remain competitive," the airline said in a release.


Another difference between the two airlines' new compensation structure is that while AC's moves were immediate, WS is deferring the changes until 01OCT. The airline says the deferral is designed to give the industry time to adjust.


During that period, WS says its representatives will be meeting with "our partners to further discuss business transformation initiatives in greater detail."


Reached for comment on his competitor's moves, Air Canada V.P. Global Sales Duncan Bureau says there is potential for “tweaks" to its commission structure following the WS announcement.


“We've seen the announcement from WestJet this morning and we will take our time to see what that means," Bureau said in a phone interview from Brazil. “We'll evaluate our announcement and if we need to make some tweaks in our structure to remain competitive then we will do so."

Bureau also pointed out that the posted commission structure represents only a baseline, with many larger producers having different deals.


Reached for comment on his competitor's moves, Air Canada V.P. Global Sales Duncan Bureau says there is potential for “tweaks" to its commission structure following the WS announcement.


“We certainly have very specific deals with a large number of agencies that we don't communicate publicly. By no means does this represent the vast majority of what our individual agreements look like."


Agents will continue to earn commission on WestJet fares sold through GDS systems as they have since 2009. As part of its commission structure changes, AC for the first time is now allowing agents to earn 4% commission for Flex and higher fares on domestic travel bookings made via the GDS
.


WestJet Vacations' base commission of 8% and commissions of 5% on all group fares remain unchanged. As well, all fares on international flights retain the 7% base commission on Econo fares and Flex fares in addition to the increase to 8% on Plus fares.


"After assessing where we want to go with our pricing, we have made the difficult decision to follow a major competitor in its approach to no-frills fares, in this case by changing the commission structure," said Lyell Farquharson, WestJet VP Sales.


"As new competitors come to market, we anticipate they will follow the global trend in the ultra-low-cost carrier category where no-frills fares are offered without commission," he said.







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